Smartphone market at crossroads

It appears that the smartphone market may be turning into a commodity market sooner than thought.

Samsung’s response to its predicament could shape the entire smartphone market. If Samsung aggressively cuts prices to improve sales, it could pressure other competitors like Nokia, HTC and Motorola Mobility to lower prices, too. That could lead to lower-quality products or even slimmer margins for the smartphone business as a whole. Already, in many recent financial quarters, only Samsung and Apple have made a profit from smartphones.

The low-end market is not Samsung’s only worry. At the high end, its main rival is Apple, which has continued to improve iPhone sales. T. Michael Walkley, a Canaccord Genuity analyst, said Apple could find even more success if the company releases phones with larger screens this year, as is widely expected.

Samsung has shown no signs that it wants to go down the price-cutting path. It declined to make an executive available for an interview, but in a written statement, the company said it would continue to compete through a diverse set of products that fulfill consumer needs.